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Sevan Drilling Ltd: Sevan announces third quarter 2016 results

Highlights Third Quarter 2016

  • Economic Utilization of 99.4%
  • Operating revenue of USD 59.6 million
  • EBITDA of USD 20.2 million
  • Non-cash asset impairment charge of USD 37.5 million
  • Net loss of USD 53.1 million

Subsequent Events

  • On October 14, 2016 Sevan Developer exercised the third six-month option of the delivery deferral agreement with Cosco Shipyard, which extends the deferral period to April 15, 2017.

Financial performance summary

For the three months ended September 30, 2016

Operating revenue

Operating revenue was USD 59.6 million compared to USD 98.4 million in Q3 2015. The decrease in revenue is primarily due to the Sevan Driller operating at a lower day rate on the well service contract which concluded on July 23, 2016. In addition to the Sevan Brasil operating at an amended lower day rate for the full quarter. The Sevan Louisiana achieved a Q3 2016 technical utilization while on contract of 98.3% (97.5% in Q3 2015), Sevan Brasil 99.3% (91.2% in Q3 2015) and Sevan Driller for the days under contract was 98.7% (100.0% in Q3 2015).

Total Operating expenses

Total operating expenses were USD 93.6 million compared to USD 56.7 million in Q3 2015. Vessel operating expenses were USD 35.8 million compared to USD 34.1 million in Q3 2015. The increase is mainly attributable to costs relating to the mobilization of Sevan Driller to China offset by further cost savings in the period. General and administrative costs were USD 3.7 million compared to USD 3.3 million in Q3 2015.  Depreciation expenses were USD 16.7 million compared to USD 17.8 million in Q3 2015. A non-cash impairment charge of USD 37.5 million was recognized in the quarter of which there was no comparative.  An impairment of USD 9.6 million was recognized on Sevan Driller, USD 2.1 million on Sevan Brasil and USD 25.8 million on Sevan Louisiana.

Net financial items

Net financial items amounted to USD 16.9 million in Q3 2016 compared to USD 17.6 million in Q3 2015.  Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 0.1 million. Interest expenses on the secured bank loan facility decreased by USD 0.7 million.

Net loss for Q3 2016 was USD 53.1 million compared to a net profit of USD 26.4 million in Q3 2015.

 

For the nine months ended September 30, 2016

Operating revenue

Operating revenue was USD 173.9 million for the nine months ended September 30, 2016 compared to USD 280.9 million for the comparative period in 2015. The decrease in revenue is primarily due to the Sevan Driller being idle for four months during the current year and then operating for three months on a well service program at a lower day rate. The Sevan Brasil operated at a reduced day rate during the nine months in 2016.

Total Operating expenses

Total operating expenses were USD 200.1 million compared to USD 186.4 million in the comparative period in 2015. Vessel operating expenses decreased by USD 20.8 million, primarily attributable to lower operating costs during the idle time on the Sevan Driller and continued cost saving initiatives across the fleet, offset by costs relating to commencing the mobilization of the Sevan Driller to China. General and administrative costs increased by USD 1.8 million due additional corporate activities part of which are reflected through higher costs from external advisers and in management services. A non-cash impairment charge of USD 37.5 million was recognized in the quarter of which there was no comparative. 

Net financial items

Net financial items amounted to USD 52.2 million for the nine months ended September 30, 2016 compared to USD 52.3 million in 2015.  Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 1.0 million.

Net loss was USD 80.9 million for the nine months ended September 30, 2016 compared to a net profit of USD 42.3 million for the comparative period in 2015.

Balance sheet

Cash and cash equivalents amounted to USD 22.4 million as of September 30, 2016 compared to USD 42.4 million as of December 31, 2015.  During Q3 2016, interest and principal payments under the debt facility and RCF were USD 11.8 million and USD 35.0 million, respectively. As of September 30, 2016, USD 185.0 million was drawn on the RCF after repayments were made in the quarter.

Sevan Drilling Limited ("Sevan Drilling") is preparing its accounts on the assumption that the company is a going concern. Liquidity remains sensitive to performance of the rigs under their contracts, the continued availability of the RCF with Seadrill, and other market conditions.

For further information, please contact:
 
Scott McReaken, CEO, Sevan Drilling Management AS
 
+47 22 33 00 00
 
About Sevan Drilling:
 
Sevan Drilling Limited is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling Limited is listed on Oslo Børs.
 
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Sevan Drilling Ltd Q3 2016

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